WW considers offers for All-Clad

WATERFORD Wedgwood could realise more than the entire current market capitalisation of the company €244m by selling off its non-core US steel cookware division All-Clad.

Unsolicited offers from at least two potential All-Clad purchasers are being considered by the Tony O'Reilly-chaired WW board for the top-of-the-range maker of pots and pans in the US.

News of the unsolicited offers were contained in a lacklustre trading statement issued by WW, which reported flat like-for-like sales in the final quarter of 2003.

This compares poorly with other luxury good makers LVMH (+8%) and Richemont (+4%) for the same period.

WW's share price fell initially by 6% yesterday but recovered before close of business to record no change on the day.

The stock fell by 52% in 2003, making it the biggest losing bet on the Irish Stock Exchange in 2003 and this was on top of a wipe-out of three-fifths of its value in the previous two years.

Such is the extent of shareholder value that could be unlocked by a sale of All-Clad that the WW board will have to look hard for reasons not to sell off the profitable business, which has the potential to halve net debt of €400m at the stroke of a pen.

The long-term aim of developing a portfolio of global luxury brands is almost certain to take a back seat to short-term financial pragmatism. All-Clad, with sales of €120m and operating profits of €21.5m, has the potential to make close to €240m in a sell-off situation.

When WW bought All-Clad in 1999, the company said: "acquisition of All-Clad is the next step in the group's strategy to create the world's largest 'luxury living' business in four premium brands: Waterford, Wedgwood, Rosenthal and All-Clad."

Selling All-Clad would put the brakes on that strategy, but would generate a handsome profit on the €104m price paid for All-Clad in 1999, a rich reward for doubling sales at the Canonsburg, Pennsylvania-based company.

WW's worldwide sales in the final quarter of 2003 were steady at €241.9m, flat on the previous year, while operating margins improved to 7.7% in the quarter as a result of cost savings.

Waterford is selling €213.6m shares to current investors to further trim borrowings and raising €165m by issuing high-yield bonds which will mature in seven years.

The company said that Wedgwood chief executive Tony O'Reilly Jnr has strengthened his management team.

The company is stepping up marketing and adding new products and has hired former Habitat creative director Georgina Godley to spice up its range.